Introduction

The Czech financial sector enters 2026 on the back of a strong rebound in lending activity and the continued diversification of financing channels. While banks remain the dominant source of credit, alternative financing through crowdfunding, private credit and non-listed corporate bonds is expected to expand further, giving corporations – particularly mid-sized companies – greater access to capital markets. Mortgage and corporate loan demand is forecast to remain stable or grow moderately, supported by easing rates and recovering investor confidence.

A major focus in 2026 will be on the banking sector regulation, ie, the amended EU Capital Requirements Directive VI (CRD VI). This reform will significantly reshape the governance and risk management landscape for Czech banks as well as investment firms. Financial institutions will be required to update internal governance systems, integrate ESG factors into their risk frameworks and meet stricter standards for management suitability. Supervisory convergence with other EU jurisdictions will intensify, and foreign bank branches will face closer scrutiny.

Another anticipated milestone for 2026 is the adoption of the Digital Economy Act, which will create a comprehensive legal framework for digital platforms and data governance. By incorporating and expanding upon the Digital Services Act, Data Governance Act and Platform-to-Business Regulation, the Act will impose stricter liability and transparency rules on digital intermediaries. For financial institutions, this will mean that adjustments to digital distribution models will be required, as well as compliance with new consumer protection and data management requirements.

Overall, 2026 is shaping up to be a transformative year for the Czech banking and finance industry. The combined effect of stricter prudential regulation under CRD VI, enhanced cybersecurity compliance and new digital economy rules will increase regulatory complexity, but also modernise the sector, align it more closely with EU standards and strengthen its resilience to systemic shocks.

Recent Developments in Lending Activities

In 2024, the Czech lending market rebounded strongly, especially in the real estate sector. New mortgage lending surged by approximately 83% year-on-year to CZK228 billion as interest rates eased, with the average mortgage rate falling to around 4.8% by year-end, restoring borrower demand. Corporate loan demand rose more moderately – by 25%, driven by financing needs for real estate development, investment, M&A and restructuring. Credit standards remained broadly stable, with some tightening in bank lending conditions in late 2024.

In early 2025, credit conditions mostly remained stable, although slight easing is expected in corporate lending. Home ownership and household loan demand has increased, supported by improving sentiment, rising property prices and modest decreases in mortgage rates. Consumer credit standards eased slightly, while demand exceeded the banks’ forecasts.

However, a structural shift in housing preferences is notable. Elevated prices and affordability constraints are pushing demand towards renting. In 2024, the Czech Republic ranked among the least affordable EU countries in which to buy property, with prices requiring 13.3 times the average gross annual salary. In Prague and Brno, rents are significantly cheaper than mortgage payments, making renting more accessible.

Regulatory frameworks also evolved. The Czech National Bank implemented minimum requirements for own funds and eligible liabilities (MREL) in 2024, ensuring banks hold sufficient capital and eligible liabilities to absorb losses. However, such measures increased the costs faced by banks, thereby slowing the decrease in loan interest rates.

At the same time, alternative financing channels grew significantly. Crowdfunding financing reached approximately CZK5 billion in 2023 and CZK10 billion in 2024, with further rapid growth expected. Currently, six domestic companies hold authorisation under the Crowdfunding Regulation, alongside 36 foreign entities operating in the Czech market. Local investors tend to favour domestic platforms over foreign ones.

The market for non-listed corporate bonds, especially those issued by mid-sized companies, expanded despite transparency and liquidity challenges. Also, investment funds are increasingly playing a role as direct lenders and bond issuers, adding depth to the financing options beyond traditional bank lending.

Overall, there is a clear trend of diversification in financing methods in the Czech market, reducing the proportion of bank lending while the aggregate volume of commercial financing continually grows. This diversification contributes to the resilience of the Czech financial system, though it remains heavily bank-dominated. Recent geopolitical and economic shocks – such as the war in Ukraine, energy price volatility, inflation and global rate hikes – dampened lending in 2022–2023, but such pressures have eased over time, supporting the recovery in 2024 and early 2025.

In 2025, the Czech lending market continued its recovery. New mortgage lending reached approximately CZK380 billion, with around 93,000 new contracts signed. The average mortgage rate had declined to 4.6% by mid-year, further stimulating borrower interest. Corporate loan demand remained robust, although some caution was observed due to global economic uncertainties. Alternative financing methods, including crowdfunding and non-listed corporate bonds, continued to grow, reflecting a shift towards more diversified funding sources.

Looking ahead to 2026, lending activity is expected to stabilise and gradually expand, supported by regulatory reforms, digitalisation initiatives and ongoing diversification of funding sources. Banks and non-bank lenders will increasingly integrate ESG considerations, advanced risk management and cybersecurity requirements into their credit processes. Mortgage demand is anticipated to remain steady, while alternative financing options, such as private credit, crowdfunding and non-listed bonds, are likely to capture a larger share of the market. Overall, 2026 is projected to be a year of consolidation and modernisation, strengthening the resilience and competitiveness of the Czech financial sector.

Legislative and Regulatory Changes

Recent amendments to the Act on Bonds, effective from 2024, provide for additional disclosure in bond issuances. For public offerings below EUR1 million, a strict regime was introduced in response to the growing number of defaults of such issuers, negatively impacting retail investors in the local market. In 2026, further amendments are expected as part of the EU Listing Act package implementation.

Further changes in the lending market may result from amendments to the investment fund regulations implementing recent changes to the Alternative Investment Fund Managers Directive (AIFMD 2). The amended bill will authorise alternative investment funds marketed to the public to provide loans and acquire receivables from loans, as well as engage in securitisation. However, the origination of consumer loans by investment funds remains limited, subject to additional consumer credit authorisation by the Czech National Bank.

The new Cybersecurity Act, effective from November 2025, expands the regulatory remit of the previous Cybersecurity Act to a significant number of firms and institutions and represents a major overhaul of the current regulatory framework. Obligations will apply not only to large financial institutions but also to key service providers and third-party suppliers, making supply-chain security a central issue.

The new Act provides for a certain transitional period, as part of which all regulated entities must implement a plethora of governance and security measures in 2026.

Also, a new Act governing the Critical Infrastructure Resilience regulation has been effective since November 2025, thereby transposing the EU directive on critical infrastructure resilience. The law provides enhanced incident reporting obligations, stricter deadlines for notifying supervisory authorities, and the mandatory adoption of advanced technical and organisational security measures. A number of financial institutions are covered by this strategic infrastructure regime.

The Act also strengthens the supervisory powers of the National Cyber and Information Security Agency (NÚKIB), which will gain more robust enforcement tools, including higher penalties for non-compliance. For the financial sector, this means closer co-operation between the NÚKIB and the Czech National Bank, ensuring that prudential regulation and cybersecurity oversight go hand in hand.

In addition, a draft bill of the AI Act adopting the EU regulation of AI is being drafted. This law provides for AI governance and numerous duties of entities (private as well as public), while devising new AI tools for platforms as well as for entities deploying AI tools in their products and services.

The Act will provide for the supervision of AI by the NÚKIB as well as the Czech Telecommunication Office, which will also gain more robust enforcement tools, while the Ministry of Trade and Industry will have a crucial co-ordination and methodological role.

In addition, the Czech government has presented a draft Act on the Digital Economy, a landmark legislative initiative to establish a comprehensive legal framework for digital activities in the country.

The proposal not only transposes key EU regulations, such as the Digital Services Act, the Data Governance Act and the Platform-to-Business Regulation, but also further develops national rules to ensure a coherent framework for digital platforms, online services and data intermediaries.

The Act introduces clearer liability rules for digital platforms, strengthens transparency obligations and provides for stricter consumer protection in online transactions. For financial institutions, this will mean adapting digital distribution channels and online services to meet new compliance requirements, particularly in the areas of platform governance and user data management.

If enacted, the Digital Economy Act will represent a decisive step towards harmonising the Czech digital market with EU standards, while also addressing local challenges, such as consumer trust, fair competition and the supervision of digital platforms.

The Act will also strengthen the supervisory powers of the NÚKIB as well as the Czech Telecommunication Office, which, again, will gain more robust enforcement tools.

Five-Year Trends and Outlook

Over the past five years, the Czech lending market has diversified far beyond traditional bank loans, while banks still dominate. Real estate developers and mid-sized corporates have increasingly used bond issuances and debt and mezzanine financing, often via online platforms such as Ronda Invest or Upvest, akin to crowdfunding. These allow larger as well as retail investors to participate in financing businesses alongside banks. Regulated crowdfunding platforms have also gained significant traction, particularly for smaller deals.

Public offerings of unlisted corporate bonds surged from CZK22.1 billion in 2021 to CZK37.4 billion in 2023. Strong interest in corporate bond issuances continued in 2024, reaching a total volume of CZK113.8 billion.

Looking ahead to 2026–2030, non-bank credit and debt financing is expected to expand further. The launch of an amended European long-term investment fund (ELTIF) regime will likely encourage Czech asset managers to create long-term investment funds focused on infrastructure and real estate lending, easing access to such investment opportunities for a number of investors, including retail.

Private credit is rapidly emerging as a leading alternative asset class, offering higher risk-adjusted returns and active investor involvement through a closer alignment with company management and greater influence over value creation. Private debt and direct lending funds – whose activity has tripled in recent years – are set to play a more prominent role in corporate and project finance, co-lending alongside banks rather than replacing them.

Tokenised debt instruments using blockchain technology, facilitated by the Markets in Crypto-Assets Regulation (MiCA), may also enter the market, providing an additional financing channel for businesses.

Anticipated Market and Legal Events

An amendment to the Act on Investment Companies and Investment Funds is being prepared. In addition, a forthcoming government subsidy programme will support the acquisition of residential heat pumps, rooftop photovoltaics and energy-efficiency retrofits. These measures are expected to drive both consumer lending and project finance.

Significant infrastructure projects (eg, highways, railways, energy) are also currently under consideration, which are likely to impact the lending market. Their scope and timing will depend on parliamentary approvals, budgetary allocations, and the priorities of the incoming government following the October 2025 general election.

There is also a general expectation that the regulatory, corporate and ethics restrictions imposed or self-imposed on banks and financial institutions in respect of financing in the defence industry will be reduced. As a result, the volume of funds directed into this sector is expected to increase.

Recent Successful Lending Transactions

One of the largest recent local corporate bond issuances was the EUR400 million bond offering by Czechoslovak Group a.s., the largest defence industry player in the Czech Republic. The successful issuance of the bonds demonstrates a significant change in the mindset of Czech investors, who are now prepared to finance the defence industry. At the same time, it shows that banks and financial institutions are gradually adapting by participating in arranging such offerings, though still keeping some distance from direct lending.

Another notable transaction was the EUR1.5 billion umbrella facility extended to Škoda Transportation by a syndicate of banks led by ČSOB. The borrower and its affiliates were allowed to draw from a combination of term, revolving and corporate guarantee facilities. This umbrella structure ranks among the largest in the Czech market.

Finally, a EUR1.1 billion certain funds facility was extended to Tanemo a.s. (a PPF group SPV) by a syndicate of banks led by ING to finance the acquisition of Moneta Money Bank listed shares via a voluntary takeover bid. This transaction was the first in the Czech Republic structured as a certain funds loan for a voluntary takeover bid. It also features a unique collateral structure combining an option on the Moneta shares and a triggered guarantee to cover any pricing delta, shifting the credit risk from the borrower acquiring the shares to the credit standing of the sponsor, PPF Group N.V.

A notable recent development in the Czech market was Air Bank’s introduction of a new investment offering that enables retail clients to invest directly in companies within the PPF Group. The first opportunity made available to investors was participation in the TV Nova EUR40 million bond issuance, which was structured under a bond programme approved by the Czech National Bank. This initiative marks an important step in broadening access to investment opportunities that were previously reserved primarily for private banking clients, thereby deepening retail participation in the Czech capital markets.